Buying an existing business skips the hardest part of a startup: finding customers. It also comes with someone else's history. This checklist keeps you focused on what matters.
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1. Define what you're looking for
Industry, size, location, how hands-on you want to be, and how much cash you can put down. Most SBA-financed purchases need a meaningful down payment from the buyer.
2. Get pre-qualified
Talk to an SBA lender early. Knowing what you can borrow keeps your search realistic and makes sellers take you seriously. See SBA 7(a) vs. 504.
3. Review the listing and sign an NDA
Sellers protect their identity, so you'll sign a non-disclosure agreement before seeing financials.
4. Make a letter of intent
Price, what's included, how you'll pay, seller financing, training period and key contingencies.
5. Due diligence checklist
- Three years of tax returns, P&Ls and bank statements that tie together
- Customer and supplier concentration
- Employee roster, pay and key-person risk
- Equipment condition and inventory count
- Lease terms and landlord approval to assign
- Licenses and permits, including the City of San Jose business tax certificate and any state or county permits your industry needs
- Pending lawsuits, liens or tax issues
6. Close and transition
Escrow handles the funds, the lender funds the loan, and the seller trains you on the systems, customers and suppliers.
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